> Does Europe need to train a frontier AI model, at all?

Perhaps. While I'm more impressed by AI than I think you are, I do also say on occasion that recent developments in AI feels much like the 90s rapid development of computer graphics, in the sense we're overly impressed by what we see only to discard it quickly when the next improvement arrives: https://archive.org/details/nextgen-issue-26

If the US government declares no model ≥ Fable can be released, that could make it completely pointless for anyone in the USA to work towards superior models, which may cause rapid catching up, or may cause the investment bubble to pop and all the money to go away.

Or it may cause all the investment to go to not-USA. China's one possibility, EU is another. No idea which would be least-distasteful to the people currently eager to invest in AI.